The “Dependent Deduction for Minors” once provided valuable tax relief for families, but it was abolished through a tax reform and replaced by the “Child Allowance.”
This article explains how the support system changed and offers a clear comparison between the two programs to help families understand their current benefits.
- What Was the Dependent Deduction for Minors
- The Background and Purpose of Abolition
- Differences Between the Dependent Deduction and the Child Allowance
- The Structure and Payment of the Child Allowance
- Impact of Abolishing the Deduction
- Relationship with Other Childcare Support Systems
- How to Make the Most of These Benefits
- Conclusion
What Was the Dependent Deduction for Minors
The Dependent Deduction for Minors was a system that reduced income and resident taxes for parents raising children under 16 years old. It was designed to lessen the tax burden on households in recognition of the high cost of raising children and education expenses.
At the time, the system worked as follows:
| Type | Deduction Amount | Eligible Person |
|---|---|---|
| Income Tax | 380,000 yen | For each dependent under age 16 |
| Resident Tax | 330,000 yen | Same as above |
This deduction meant that families with more children could enjoy a lighter tax burden, providing meaningful financial relief.
However, the system had a drawback — the higher a person’s income, the greater the benefit, which created inequality between high- and low-income households.
Because of this imbalance, the government abolished the deduction in 2011 and introduced the Child Allowance, a new program providing direct cash payments instead of tax reductions.
The Background and Purpose of Abolition
The abolition of the dependent deduction was not just a tax reform — it represented a major policy shift in Japan’s approach to family and childcare support.
| Before (Tax Deduction) | After (Cash Allowance) |
|---|---|
| Greater benefit for high-income earners | Equal support regardless of income |
| Indirect aid through tax reduction | Direct support through cash payments |
| Benefits were not tangible | Benefits can be felt immediately through cash |
The government aimed to achieve “fair and easily understandable support.”
By replacing tax deductions with cash benefits, low-income and non-taxable households could receive financial help that was previously out of reach.
Another major motivation was Japan’s declining birthrate. Policymakers recognized that financial burdens related to childbirth and education were discouraging families from having more children, and they sought to provide visible, direct assistance.
Differences Between the Dependent Deduction and the Child Allowance
Both systems shared the same goal — supporting families raising children — but their mechanisms and impact differed greatly.
| Comparison | Dependent Deduction | Child Allowance |
|---|---|---|
| Type of Support | Income/resident tax deduction | Direct cash benefit |
| Eligible Age | Under 16 | 0 to 15 (until graduation from junior high school) |
| Benefit Amount | 380,000 yen (income tax) / 330,000 yen (resident tax) | 10,000–15,000 yen per month |
| Income Limit | None | Income limit applies |
| Payment Timing | At annual tax filing | 3 times per year (June, October, February) |
| Managing Authority | Tax Office | Local government office |
In short, the deduction benefited those with higher income, while the Child Allowance ensures fairer and more visible support for all families through direct payments.
The Structure and Payment of the Child Allowance
The Child Allowance provides financial aid depending on the child’s age and number of siblings, as summarized below:
| Child’s Age | Monthly Payment | Notes |
|---|---|---|
| 0–2 years | 15,000 yen | Flat amount |
| 3 years–Elementary (1st/2nd child) | 10,000 yen | Standard rate |
| 3 years–Elementary (3rd child or later) | 15,000 yen | Additional benefit |
| Junior High School | 10,000 yen | Until graduation |
| Over income limit | 5,000 yen | Special benefit applies |
The Child Allowance directly increases household income and provides practical assistance with day-to-day expenses.
Applications are submitted to local municipalities, and payments are made three times per year. It is important to apply promptly after birth or moving to a new city, as late applications can result in lost benefits.
Impact of Abolishing the Deduction
The abolition of the dependent deduction resulted in a tax increase for some households, particularly those with multiple children who had previously benefited from larger deductions.
However, for low-income and non-taxable families, the Child Allowance provided immediate relief through direct financial support. The policy shifted from “indirect support through tax” to “direct support through cash,” emphasizing fairness and transparency.
The reform brought both advantages and challenges:
| Aspect | Advantage | Challenge |
|---|---|---|
| Effect on Households | Directly increases disposable income | High-income families experience tax increases |
| Fairness | Reaches low-income families more effectively | Income limits can cause perceived unfairness |
| Policy Direction | Promotes shared responsibility for childrearing | Some families find the system complex |
Overall, the reform made Japan’s child support policies more inclusive while continuing to evolve toward long-term sustainability.
Relationship with Other Childcare Support Systems
Japan’s current childcare support system is extensive and multi-layered. The Child Allowance serves as the core, complemented by additional measures that support education, healthcare, and childbirth.
| Program | Description | Eligibility |
|---|---|---|
| Free Early Childhood Education and Care | Free nursery/kindergarten fees | Ages 3–5 (Ages 0–2 for low-income families) |
| High School Tuition Support | Tuition aid based on income | High school students |
| Lump-Sum Birth Allowance | 500,000 yen per childbirth | All mothers |
| Child Medical Expense Aid | Covers medical costs for children | Depends on municipality |
| Single-Parent Family Allowance | Monthly cash support for single parents | Based on income limits |
Many municipalities also provide local child support subsidies, creating a more comprehensive and accessible safety net for families.
How to Make the Most of These Benefits
To receive the maximum benefit, families must understand and manage their use of these systems strategically.
Below are three key points for effective use:
| Key Point | Explanation |
|---|---|
| 1. Stay Informed | Regularly check official updates from your city office or the Ministry of Health, Labour and Welfare. |
| 2. File Applications on Time | The start date for payments depends on the application date. |
| 3. Monitor Your Income | Exceeding the income limit may reduce the payment amount. |
By following these principles, families can avoid missed benefits and ensure continued financial support.
Conclusion
The abolition of the Dependent Deduction for Minors marked a turning point in Japan’s family policy. It shifted from indirect tax relief to direct financial support through the Child Allowance, ensuring broader and fairer assistance for families.
Today, Japan offers a range of programs covering childcare, education, and healthcare, reflecting a shift toward a society that supports childrearing collectively.
Understanding and utilizing these systems wisely allows families to reduce financial anxiety and create a more secure environment for raising children. As policies continue to evolve, awareness and proactive participation remain essential for every household.
